§ Motion made, and Question proposed, That the Clause stand part of the Bill.
§ Sir Hugh Lucas-Tooth (Hendon, South)
Last year, I moved a new Clause to the Finance Bill designed to give relief to those victims of Nazi persecution who were subject to British taxation and who were receiving annuities tax-free in Germany. I need not go into details. All hon. Members who have taken an interest in the matter will remember the point. The Clause received general support from hon. Members on both sides of the Committee. This Clause gives effect to what I wished to do then, very fairly and very fully; indeed, more fully, because it does so with complete retrospective effect.
It also does so in a straightforward way. It gives relief from tax instead of resorting to some device. The Government are right in taking that view. This is an entirely exceptional type of case, and they have dealt with it exceptionally, simply by giving a specific relief. I thank my right hon. Friend the Chancellor of the Exchequer and also my hon. Friend the Financial Secretary for putting the Clause into the Bill. I can tell them and other hon. Members that I have received a number of letters of thanks from those who are affected by the Clause. We are all accustomed to receiving letters of complaint and abuse; we do not often receive many letters of thanks. I hope that they will be taken as thanks to all hon. Members who have secured this excellent result.
§ Mr. Wade
This Clause has all-party support. When one has been pressing for a reform for a number of years, and the reform is eventually introduced, it is very easy to let it pass without comment. But this Clause deserves a word of comment and commendation. I welcome the decision, although it is long overdue. When the compensation was computed I understand that it was computed on the assumption that no tax would be imposed by Great Britain, and it has never seemed fair that this should be levied.
It would seem that the decision now to be made as a result of the introduction of the Clause will bring the law into 1474 line with that of Denmark, France, Eire, the Netherlands, Norway, Sweden, Switzerland and the United States. All those countries have allowed these victims of Nazi persecution to receive their compensation without deduction of tax. I welcome their relief and the fact that it will be to a certain extent retrospective. I have no doubt that other hon. Members will be of a like mind.
§ Sir H. d'Avigdor-Goldsmid
It is a rare pleasure to be able to say an unreserved "Thank you" to the occupants of the Treasury Bench and to my right hon. Friend and the hon. Friends who assist him. I must also thank those who have supported the proposal since 1957, and I want to refer particularly to the very important support we received last year from the hon. Member for Sowerby (Mr. Houghton) and from my right hon. Friend the present Minister of Health. At that time they interested themselves in a matter on which in a previous debate in 1957 they had taken opposing views. When credit for this important change of mind is given, I cannot help feeling that they contributed more than a little to this decision.
I should not like the occasion to pass without reference to my hon. and learned Friend the Member for Northwich (Mr. J. Foster) because he was responsible for initiating a similar Clause in 1957. I cannot help feeling that it was due to his initiative then that we now have this Clause which makes this exemption retrospective to 1957.
I think that we should place on record the names of those hon. Members who have contributed to this eminently satisfactory result.
§ 7.30 p.m.
§ Sir E. Boyle
I rise only to thank hon. Members for their comments and to say how much I agree with them. This is the third time in recent years that we have discussed this subject, and I would not be human if I did not feel a good deal happier speaking in response to the debate on this Clause this evening than I felt late at night when I responded to the debate on the Clause on this subject last time, or my right hon. Friend the Minister of Health felt when he held my office and replied to the debate on this subject in 1957.
1475 All hon. Members realise that this is not an easy matter. The exemption contained in this Clause is contrary to the general principle of the Income Tax Act, which is that receipts of an income nature are taxable, irrespective of the reason underlying their payment, and that the sole criterion of the liability is the taxpayer's ability to pay. I mention that because one has to remember how dangerous it can be to make changes in our Income Tax law and to introduce new principles without due consideration.
When we discussed this matter last year, I think the Committee felt that this compensation arises in what are demonstrably exceptional circumstances of unprecedented hardship and suffering, and I assure my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) that Lord Amory and my right hon. and learned Friend in reviewing this matter took full note of the views expressed last year by hon. Members on both sides.
I agree that it is an impressive point that the hon. Member for Sowerby (Mr. Houghton) and my right hon. Friend the present Minister of Health took different views last year from those they took in 1957. I also agree with what my hon. Friend said about the work of my hon. and learned Friend the Member for Northwich (Mr. J. Foster) in this connection. Not only has he advocated this case eloquently in the House, but also in deputations, and I was very impressed with his arguments when he led a deputation to see me soon after I returned to the Treasury.
The Committee can be very pleased this evening that we are exempting with retrospective effect certain compensation payments made by the Federal German Government or the Government of any constituent States to victims of Nazi persecution who are resident in this country. I am grateful for the response which the Clause has had.
§ Mr. Houghton
When I saw the Minister of Health come into the Chamber a few moments ago, I thought that he too had been drawn here by some hidden magnet to see a very happy conclusion to a matter which he and I had taken part in debating in years past.
I apologise for the temporary absence of my right hon. Friend the Member for 1476 Huyton (Mr. H. Wilson) who intended to welcome this Clause. In view of my past it was thought that it was perhaps more suitable that he should do it than that I should. I am glad that the Financial Secretary said what he did because I am sure that those of us who took a certain view in 1957 were not just being cussed, and still less could it be said that we had no sympathy for the victims of this terrible period in world history. It was just that we felt that because of our basis of assessment for Income Tax purposes, and in particular the fact that we assess to Income Tax war widows' pensions whereas some other countries do not, that we were perhaps not in a strictly comparable position with other countries in granting exemption from Income Tax to these annuities.
However, as the hon. Gentleman said, there was a change of view last year, and I think we all felt that opinion was moving towards granting this exemption, doing it retrospectively, giving a reasonable time for claims to be made, and doing it in a most handsome and adequate way. I am glad that that has been found possible, and I am sure that it will bring great joy to all my hon. Friends that this disturbing question of taxation has been brought to a favourable conclusion. I am sure that the hon. Member for Hendon, South (Sir H. Lucas-Tooth), who has received letters from victims of Nazi oppression and horrors, fully deserves the thanks given to him. For my part, I was striving to defend the purity of our taxation system, and perhaps in this Committee that is something of which to be ashamed.
§ Question put and agreed to.
§ Clause ordered to stand part of the Bill.